Amid a situation in which worries over the next year's economic prospect are mounting, Bank of Korea governor Lee Ju-yeol made a comment that there would be no escaping from the low-growth and deflation trap without fundamental restructuring of the economy.
He said on December 11 in a press conference held immediately after the Monetary Policy Committee meeting, "The reason the economy won't recover even after two rate cuts and the government's fiscal measures is the current recession is due to structural causes rather than cyclical. Although we need monetary policy measures to counter it, it is more important to respond with structural perspectives."
"Taking into account demographic changes and the anemic investment pace since the 2008 global financial crisis, it's little surprise that the potential growth rate is moving downward. The main reason the effect of Japan's Abenomics stopped working has also something to do with these structural causes as it focused exclusively on expansionary monetary policy," he added.
This is not the first time the governor brought up the issue of structural reform. In September this year, he broached the problems of the bi-polarized labor market between regular workers and temporary ones and the rapidly shifting demographic structure toward an aging society as the main obstacles to further economic growth. Today's remarks were important in that it represented an official stance of the central bank and may be reflected in the next year's policy direction.